It is a recipe for a slow economic recovery: Consumers saving more, scarcely spending and reducing debt.
And that’s what the U.S. Commerce Department is reporting.
On Tuesday, Commerce reported that the personal savings rate – the amount Americans don’t spend from their income – increased to 6.4 percent in June, the highest level since June 2009.
Before the financial crisis and current recession, that savings rate wobbled slightly between 1 and 2 percent for years.
Household spending, which represents nearly two-thirds of the economy, was unchanged in June from May, Commerce reported.
Analysts on average expected a slight gain in consumer spending.
Personal income was stagnate in June, registering a drop for the first time since September.
Last month, the Federal Reserve reported that overall consumer credit fell in May by 4.5 percent, and April’s slight increase was adjusted to reflect a significant decline – more indications of an American public consumed with lowering debt or unwilling or unable to increase borrowing.
The Fed said that May also marked the 20th consecutive month of a decline in credit card balances, down 10.5 percent, or $7.4 billion, for a total of $830.8 billion.
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Amen! Americans finally getting religion and thinking about the future! We’ll deal with the slow recovery if it means a more solid financial footing for the average American.